Karnataka High Court
Sri Hanamantappa S/O Sangappa Talawar vs The Management Of Nwkrtc on 13 June, 2025
Author: Pradeep Singh Yerur
Bench: Pradeep Singh Yerur
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WP No. 101886 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 13TH DAY OF JUNE 2025
BEFORE
THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR
WRIT PETITION NO. 101886 OF 2025 (S-KSRTC)
BETWEEN:
SRI. RACHOTI
S/O. CHANDRASHEKHARAYYA BALAGANURMATH,
AGE: 62 YEARS,
OCC: RETIRED TECHNICAL ASSISTANT,
R/O. LINE BAZAR, NEAR DURGADEVI TEMPLE,
TIKARE ROAD, DHARWAD-580001,
TALUK & DIST: DHARWAD.
...PETITIONER
(BY SRI. RAVI HEGDE, ADVOCATE)
AND:
THE MANAGEMENT OF NWKRTC,
HUBBALLI-DHARWAD CITY DIVISION,
REPRESENTED BY ITS DIVISIONAL CONTROLLER,
Digitally signed 5TH FLOOR, C.B.T. HUBBALLI-580020.
by
VIJAYALAKSHMI ...RESPONDENT
M KANKUPPI
Location: HIGH
COURT OF (BY SRI. PRASHANTH S. HOSMANI, ADVOCATE)
KARNATAKA
DHARWAD
BENCH
Date: 2025.06.19 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
16:00:58 +0530
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT OF
MANDAMUS OF POSITIVE NATURE, DIRECTING THE RESPONDENT TO
PAY THE INTEREST AT THE RATE OF 12% P.A. ON THE BELATED
PAYMENT OF TERMINAL BENEFIT I.E., LEAVE ENCASHMENT BENEFIT,
BY FIXING OUTER LIMIT AND ETC.
THIS PETITION COMING ON FOR PRELIMINARY HEARING IN 'B'
GROUP THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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ORAL ORDER
(PER: THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR)
This petition is filed by the petitioner seeking a writ of
mandamus for a direction to the respondent to pay interest
at the rate of 12% per annum on the belated payment of
leave encashment benefit as per the request made in the
representation dated 13.12.2024.
2. Petitioner was appointed as Technical Assistant in
the respondent-Corporation in the year 1990. After serving
the Corporation for more than 33 years, he retired from
service with effect from 30.06.2023. Immediately after the
retirement, the terminal benefits i.e., leave encashment
benefit was not paid. The respondent belatedly paid leave
encashment benefit by way of cheque dated 23.05.2024
after lapse of 11 months and no interest was paid on the
said amount. It is contended by learned counsel for the
petitioner that as per the Circular No.58 dated 09.07.1998,
the terminal benefits and all other benefits are required to be
paid as on date of retirement itself and the same does not
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indicate the consequences for non-payment of the said
benefits belatedly.
3. This being the state of affairs, the petitioner
approached the respondent-Corporation requesting for
payment of interest for the delayed period with regard to
leave encashment benefit. The representation came to be
made on the 13.12.2024 claiming interest at the rate of 12%
per annum. The representation was served on the
respondent, however, no reply was given and no payment
was made towards interest on the belated leave encashment
benefit. Hence, being aggrieved by the non-payment of
interest for the delayed period, petitioner is before this
Court.
4. It is the contention of learned counsel for the
petitioner that the question of the petitioner having been
employed in the respondent-Corporation, having put in 33
years of service and having retired from service on the date
mentioned hereinabove are all not disputed, so also the
payment of terminal benefits i.e., leave encashment benefit
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paid by the respondent-Corporation. It is the vehement
contention of learned counsel for the petitioner that it is the
onerous duty of the respondent-Corporation to bid farewell
to the employee having served for more than 33 years in the
organization in a respectful manner by relieving him by
making payment of all benefits pension, salary, terminal
benefits, other benefits including leave encashment as on the
date of his retirement. But in the present case, no doubt the
other benefits of salary, gratuity and other benefits have
been paid, but the leave encashment benefit was paid
belatedly but the interest for delayed payment has not been
paid till date despite giving representation to the respondent-
Corporation.
5. He further contends that there is no justifiable
grounds on behalf of respondent-Corporation to withhold the
interest on leave encashment benefit which is rightfully
entitled to the petitioner. It is further contended that this
amount of leave encashment, though it is paid belatedly, the
interest amount towards the said leave encashment has not
been paid. Therefore, the amount which was due to the
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petitioner and liable to be paid as on the date of retirement
was admittedly lying with the respondent-Corporation
fetching interest which has gone to the benefit of the
Corporation. Therefore, the interest component would have
to be paid for the delayed payment of the leave encashment
to the petitioner.
6. Learned counsel for the petitioner relies on the
following judgments in support of his case.
i) Judgment of this Court in W.A.No.5022/1998
decided on 27.01.1999;
ii) Order of this Court in W.P.No.100157/2024
decided on 22.02.2024;
iii) Judgment of Hon'ble Supreme Court in the
case of Vijay L. Mehrotra and State of U.P.
and others in C.A.No.689/2000 dated
31.01.2000;
iv) Judgment of Hon'ble Supreme Court in the
case of Workmen of Hindustan Steel Ltd.,
and Hindustan Steel Ltd., and others, in
C.A.No.1137(NL) of 1981 dated 12.12.1984;
v) Judgment of this Court in
W.P.No.35513/1993 dated 16.09.1998;
vi) Order of this Court in W.P.No.101519/2024
connected with batch of petitions dated
24.06.2024.
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7. Learned counsel vehemently contends that in the
judgment of a Co-ordinate Bench of this Court in
W.P.No.100157/2024, this Court allowed the petition and
granted interest at the rate of 9% per annum from the date
of their retirement till the date it was paid. The said
judgment was challenged before the Hon'ble Division Bench
in Writ Appeal No.100193/2024. The said writ appeal came
to be dismissed on 29.07.2024 upholding the order passed
by the Co-ordinate Bench of this Court awarding interest at
the rate of 9% per annum till actual date of payment. The
order of the Division Bench came to be challenged again
before the Hon'ble Apex Court in SLP No.25445/2024, which
came to be dismissed on 04.11.2024. Therefore, it is the
contention of learned counsel for the petitioner that in the
present case the respondent having not paid interest for the
delayed payment of leave encashment even till date, despite
giving the representation, the petitioner is entitled to interest
at the rate of 12% per annum. Hence he seeks to allow his
petition.
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8. Per contra, learned counsel Sri Prashant Hosmani,
representing the respondent-Corporation vehemently
contends that the payment of retirement benefits, salary,
pension, gratuity and all other benefits have been paid to the
practitioner/retired employee on time. There may have been
a slight delay in payment of the leave encashment. The
reason for such delayed payment is due to the intervening
COVID-2019 pandemic that had arisen across the world
which affected the entire world and to a large extent India,
which affected each and every individual, corporation and
organizations including the respondent-Corporation, thereby
undergoing severe financial constraint and crunch. However,
despite all these hiccups and financial constraints,
respondent-Corporation was able to make the payment of
retirement benefits, gratuity and leave encashment, though
there may have been a little delay in making the payment.
But the interest on delayed payment may not be sustainable
as sought for by the petitioner in this petition for the reason
that the Corporation was in severe financial crisis.
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9. Learned counsel for the respondent further
contends that the Government vide order bearing No.AE 211
PEN 2021, Bengaluru, dated 22.02.2022, provided a
provision for payment of interest on the delayed payment of
dearness allowance, gratuity and leave encashment,
whereby the Government passed an order that interest was
payable on delayed payment of the aforesaid amount at 8%
per annum came to be revised and reduced to 5.4% per
annum. Thus it is his contention that taking into
consideration the COVID-2019 pandemic period where
financial constraint was incurred by the respondent-
Corporation, the Government has reduced interest on
delayed payment to 5.4% per annum as against 8% per
annum. Under the circumstances the interest so claimed by
the petitioner in this petition would not be the correct
proposal for granting interest and since the Government has
reduced it to 5.4% per annum, the same may be the correct
percentage to grant interest.
10. Learned counsel for the petitioner relies on the
judgment of a Co-ordinate Bench of this Court in the case of
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Sri Prakash vs. the Works Manager, NWKRTC, Regional
Workshop, Gokul Road, Hubballi, in a batch of petitions in
W.P.No.101519/2024 connected with several other matters,
considering the contentions put forth by the learned counsel
for the respondents, the Co-ordinate Bench of this Court in
the above mentioned batch of writ petitions considered the
submissions with regard to COVID-2019 pandemic period
and the lockdown and financial constraint and crunch of the
respondent-Corporation and also the Government order
reducing interest rate from 8% to 5.4% per annum awarded
interest on delayed payment of leave encashment at 6% per
annum to be paid within a period of eight weeks from the
date of receipt of copy of the order and on non-payment of
the said amount within the said period, the interest was
liable to be paid at 9% per annum for the delay instead of
6% per annum.
11. Having heard learned counsel for the petitioner
and learned counsel for the respondent as stated earlier, it is
not in dispute that the petitioner was employed in the
respondent-Corporation, put in his hard work and service of
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more than 33 years, honorably retired on 30.06.2023.
Thereafter the leave encashment benefit was paid on
23.05.2024 and no interest was paid for the delayed period
even as on date. The only ground sought for reduction of
interest by the learned counsel for respondent is for the
reason of COVID-2019 pandemic affecting the entire world
which crippled the financial flow and the respondent-
Corporation fell into financial constraint and crunch due to
which the payment could not be made on time.
12. I have given my thoughtful consideration to the
submissions put forth by learned counsel for both parties.
This Court is concerned with only the interest for the delayed
payment of leave encashment benefit whether the interest
has to be paid at 12% per annum as sought for by the
petitioner in the petition and whether it requires to be
reduced to 6% per annum as awarded by the Co-ordinate
Bench of this Court and 9% per annum as awarded by the
Co-ordinate Bench of this Court in other petition hereinabove
stated supra. Two Co-ordinate Bench judgments have held
9% per annum in the earlier judgment in
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W.P.No.100157/2024 and 6% per annum in the case of
W.P.No.101519/2024 and connected matters in the later
judgment of my esteemed brother, the interest component
came to be reduced to 6% per annum based on the
Government circular and considering the submissions with
regard to COVID-2019 pandemic and financial crunch and
constraint. However, in the said judgment it was ordered
that interest to be paid at 6% per annum within a period of
eight weeks, failing which the interest would be incurred at
9% per annum for the delayed period. It is now brought to
the notice of this Court that the said order has not been
complied by the respondent and interest at the rate of 6%
per annum has not been paid, thereby the interest would
now have to be paid at 9% per annum.
13. The aspect of interest on the delayed payment
has been a subject matter which has been discussed way
back by the Hon'ble Apex Court in the case of State of
Kerala vs. M.Padmanabhan Nair by the Hon'ble Apex
Court on 17.12.1984, whereby the interest was awarded at
12% per annum and that was also on the leave encashment
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and on retiremental benefits and pension benefits. The
Hon'ble Apex Court in the case of Sashilata Verma vs.
State of Bihar and others, reported in (2005) 12 SC
197, dealt with a similar matter with regard to interest on
delayed payment on leave encashment benefit. While dealing
with the same, the Hon'ble Apex Court ordered 12% interest
on the delayed payment of amount on leave encashment to
be paid subsequently. In another judgment reported in the
case of Jagdish Prasad Saini and others vs. State of
Rajasthan and others, reported in 2022 SCC Online
1298, the Hon'ble Apex Court dealing with a similar
situation, on interest on the delayed payment of leave
encashment benefit ordered 10% interest from the date of
their entitlement till the date of payment.
14. Therefore, in my humble opinion the leave
encashment or terminal benefits or pensionary benefits are
the amount which is the legally entitled amount of the
employee which ought to have been released and disbursed
as on date of the retirement and if there is any delayed
payment, the same having remained with the respondent-
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Corporation and having earned interest which had accrued to
the interest of the respondent-Corporation, necessarily
should go to the benefit of the employee and cannot be
denied to the petitioner/employee. Under the circumstances,
keeping in mind the judgment rendered by my esteemed
brother, stated supra and judgments of a Co-ordinate Bench
of this Court, it would be in the interest of the party, namely
the petitioner to be legally entitled to a reasonable interest
stipulated hereinabove by the Hon'ble Apex Court.
15. Coming to the aspect of the ground urged by
learned counsel for respondent-Corporation with regard to
COVID-2019 pandemic and the financial crunch, I am of the
opinion that the COVID-2019 pandemic came to an end in
the early 2022. We are in the year 2025. Therefore there
was no harm or restraint or constraint for the respondent-
Corporation to have paid the interest for the delayed period
towards leave encashment pursuant to the year 2022.
Admittedly, in this case interest is not paid, so also in the
judgment rendered by the Co-ordinate Bench of this Court,
wherein the benefit was given to the petitioner by reducing
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interest to 6% per annum, taking into consideration the
order of the State Government on the basis of COVID-2019
pandemic, has also not been availed and made use of by the
respondent-Corporation.
16. It is also relevant to mention that even after the
petitioner having made a representation to the respondent-
Corporation on 13.12.2024, interest on belated leave
encashment has not been paid, be it whatever percentage,
which by itself shows the conduct and intent of the
respondent-Corporation. Under the circumstances, having
not availed the benefit which was granted by the Co-ordinate
Bench of this Court, I do not find any need to extend the
same benefit to the respondent-Corporation. Under the
circumstances, I pass the following:
ORDER
i) The petition is partly allowed.
ii) A writ of mandamus is issued directing the
respondent-Corporation to pay interest at the
rate of 9% per annum on the belated payment
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towards leave encashment benefit on the basis
of the representation submitted by the
petitioner from the date of retirement till the
actual date of payment made to the
respondent- Corporation.
iii) This amount shall be paid within a period of six
weeks from the date of receipt of a copy of this
order.
iv) If the said amount is not paid within a period of
six weeks at the rate of 9% per annum, the
interest would have to be paid at 12% per
annum thereafter.
Sd/-
(PRADEEP SINGH YERUR)
JUDGE
KGK
CT-MCK
